Landlord Waiver and Oral Modifications to Lease Agreement. In Sabatini v. Its Amore Corp., a tenant had commenced and completed parking lot modifications without landlord’s written consent, which written consent was required by the lease. The lease also contained provisions preventing oral modifications or waivers of the lease covenants. Landlord sued the tenant for breach of lease as a result of the unauthorized modifications. The Court held that in this instance landlord had waived its lease requirements as (i) landlord was aware of the ongoing modifications; (ii) had conversations with the tenant regarding the work; and (iii) did not object (verbally or in writing) to the work until the work was substantially complete. Good practice for landlords, based on this decision, would be to document promptly and in writing any concerns or issues with tenant actions or breaches under the lease to avoid an assumption of waiver or deemed approvals.
Tax-exempt Tenant Does not Qualify Property for Real Estate Tax Exemption. In this case, a public tax-exempt charter school leased property from a commercial landlord. The lease provided that the tenant would pay all real estate taxes assessed against the property. The tax-exempt school tenant sought real estate tax exemption for the property under the Pennsylvania General County Assessment Law exemption for public schools. The Court held that, despite the fact that the tenant was a public school, the leased property generated revenue for the landlord and was owned by a for-profit entity, therefore the property did not qualify for tax exemption. In Re Appeal of Collegium Foundation, et al., 991 A.2d 990 (PA Comm. Ct. 2010).
Landlord Liability for Fire Damage, No Certificate of Occupancy. In Community Preschool & Nursery of East Liberty, LLC v. Tri-State Realty, Inc., (WDPA 2010) a tenant filed against landlord after the leased premises were damaged by fire, and the landlord terminated the lease in accordance with its casualty clause rather than restoring the premises. The tenant sought damages based on landlord negligence alleging that the upstairs level was leased and occupied without a certificate of occupancy, and that this constituted sufficient evidence of negligence. The Court held that the tenant was unable to sufficiently prove causation of the fire (suspected to be faulty wiring) in order to find landlord negligent or in breach of a duty.
Residential Rental Registration Ordinances. Many townships and municipalities throughout the United States have enacted ordinances requiring the registration and/or periodic safety inspections by landlords of residential rental units. Such ordinances have been subjected to constitutional challenge in Pennsylvania.
Pittsburgh, PA: In December 2007, the City of Pittsburgh passed a rental housing registration ordinance requiring landlords to register before renting or leasing housing rental units in the city. The ordinance requires that, prior to registration, all rental units be inspected and issued a certificate of occupancy, accompanied by the payment of inspection and certification fees. In March of 2009, several parties filed a lawsuit opposing the ordinance alleging (i) violation of the rights to due process, equal protection and privacy under the US and Pennsylvania Constitutions; (ii) violation of the Pennsylvania Home Rule Charter; and (iii) alleging that the ordinance constitutes an illegal revenue-generating tax. Enforcement of the ordinance has been stayed indefinitely by consent order before the Allegheny County Court of Common Pleas, Judge Joseph James, since November 2009, while the parties attempt to negotiate a settlement of the matter. The complaint noted the physical impossibility of inspecting, certifying and registering over 69,000 rental units in the City in the proposed four month registration period. The Apartment Association of Metropolitan Pittsburgh, et al, v. The City of Pittsburgh, et al; GD 09-3986, Allegheny County Court of Common Pleas.
Hazleton, PA: The United States Court of Appeals for the Third Circuit in September, 2010 affirmed a district court’s permanent injunction against enforcement of rental registration ordinances adopted by the City of Hazleton, PA. The Hazleton rental registration ordinance was adopted for the general purpose of preventing the harboring of illegal aliens, and required that, before any person over the age of 18 could occupy a residential rental unit, that person must first obtain from the city code enforcement officer an ‘occupancy permit’ which required proof of legal US citizenship or residency. The ordinance required compliance and enforcement by landlords, with consequent fines and penalties. The complaint alleged violations of the Supremacy, Due Process and Equal Protection clauses of the US Constitution, the Fair Housing Act, the Pennsylvania Home Rule Charter and Landlord and Tenant Act. The Court in its opinion recognized the right of municipalities to “regulate rental accommodations to ensure the health and safety of its residents,” but held that the ordinance in question was designed to regulate who could live there, an immigration policy, which regulation is preempted by federal law. The lawsuit also enjoined a second Hazelton ordinance, which regulated the employment of illegal aliens. Lozano, et al, v. City of Hazleton, No. 07-3531, (3rd Cir. Sept. 9, 2010).